Rent Deferral Agreement

Rent Deferral and Rent Abatement are two different types of relief offered by a landlord as a concession to a tenant. Rent deferral refers to a postponement of rental payments until a later time, to be defined in a Rent Deferral Agreement executed by the landlord and the tenant. Rent deferral can be complete or partial. The tenant is obligated to repay the deferred portion of the rent at the end of the deferral period. The payment schedule and any interest charged will be defined in the agreement. On the other hand, rent abatement is a free rent concession for a limited period. It can be for any reason, such as an incentive to a tenant for agreeing to an extended lease term. By nature, landlords are unlikely to offer rent abatement for longer than rent deferral, with a couple of months the most common.

The landlord may want to consider:

• Obtaining substitute tenants if the lease is terminated.

• The history of lease amendments history with current and previous tenants.

• Any restrictions that may prevent the execution of a Rent Deferral Agreement. The limits may be imposed by the management agreement, partnership, or mortgage conditions.

The tenant may want to consider:

• The ability to resume full-capacity operations in the short and long terms.

• Operating costs and other obligations.

• Other sources of tenant relief, including government assistance, business insurance, and tax relief programs.

• The ability to meet rent payments based on the current financial situation.

Rent Relief programs for tenants affected by COVID-19 are available in the United States, but not on the federal level. The city of Los Angeles, for example, approved $103 million for rent relief, so far the most extensive program in the country. California also has a moratorium on evictions, which will end 90 days after the Governor lifts the state’s COVID-19 emergency. Check for rent relief programs in your state and county at COVID-19 Relief Programs for Businesses and Employers.

Landlords can file eviction notices during the coronavirus pandemic or any other state of emergency unless specifically forbidden otherwise. However, if your state, city, or county has put a hold on evictions, family courts will not be processing eviction so any eviction notices would have no teeth behind them. Without a court-enforced eviction, it would be illegal for landlords to cut off the water or electricity, change the locks, and so forth.